Bankers among hundreds to be questioned over Isle of Man offshore tax avoidance scheme

Hundreds of wealthy investors in an offshore tax avoidance scheme will be interviewed under caution this month as the Revenue increases its pressure on users of such plans.

More than 200 participants in an Isle of Man scheme put together by tax firm Montpelier have been invited for interviews by Revenue & Customs, said Mark Spragg of Keystone Law, which is acting for some investors as well as the firm.

Trouble on the horizon: Criminal investigations into bankers involved in the schemes could threaten the bankers¿ status with the Financial Services Authority ¿ and hence their careers.

The move is part of a broader criminal investigation into Montpelier. It is unusual for the taxman to instigate a criminal investigation into individual investors in tax schemes.

The investors, many of whom are understood to be senior City bankers, bought into a Montpelier scheme that involved contracts for difference – derivatives used to speculate on share prices without buying the shares themselves.

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Some tax advisers suggest that criminal investigation into bankers involved in the schemes could threaten the bankers’ status with the Financial Services Authority – and hence their careers. The regulator determines whether bankers are ‘fit and proper’ to carry out jobs in financial services.

‘I don’t think being investigated would require notification,’ Spragg said. ‘If they were arrested, it would be very serious, something they would have to tell their employer about and could be suspended for.’

Investors in failed tax schemes, meanwhile, got a boost last week after the High Court ruled that they could sue their advisers for mis-selling, even if they had already received the maximum £150,000 payout from the Financial Ombudsman Service over their complaints.

Richard Rhys of Rebus Investment Solutions, a firm that helps investors who were mis-sold schemes, said the judgment was good news. ‘Many of the claims we are dealing with far exceed the £150,000 barrier,’ he said.